Hollande asks Europe for patience with France, vows reform

Reuters News
Posted: Sep 18, 2014 12:56 PM

By Julien Ponthus

PARIS (Reuters) - President Francois Hollande pleaded with Germany and other European partners on Thursday to be patient with France and give it more time to reform before it meets EU deficit targets, admitting that results were coming too slowly.

Hollande announced at a news conference that Paris would join the United States in air strikes in Iraq to combat Islamic State fighters and send a military field hospital to Guinea to help fight the ebola epidemic gripping West Africa.

But his "man of action" posture on international affairs contrasted with the absence of new policy initiatives on economic reform or fiscal policy.

The Socialist leader, whose approval ratings have slumped to an all-time low of 13 percent, promised he would work till the end of his term in 2017 to modernize France, revive its stagnant economy and protect its generous social model.

Rejecting pressure to scrap the 35-hour work week, cut the minimum wage, raise the retirement age or leave the euro zone, Hollande said France should not be expected to carry out in five years labor market reforms that had taken Germany 10 years in far more favorable economic conditions.

Two weeks after Paris irked EU partners by saying it would not bring its public deficit down to the EU limit of 3 percent of national income until 2017 - two years after a repeatedly extended deadline - Hollande said he would not go beyond the budget savings already announced.

"France will not do more than that because it would be bad for growth. France will not raise new taxes, which could hurt the recovery," he said, adding that Prime Minister Manuel Valls would explain that position to German Chancellor Angela Merkel when they meet in Berlin next Monday.

"Our German friends are perfectly right to remind us at each opportunity to do reforms. We've done some," Hollande said. "Don't ask us to do in 5 years ... what our German friends did in more than 10 years in a much more favorable economic setting and without any constraint from the public deficit."

"Results are slow in coming, I recognize that," the president told some 350 reporters and his entire cabinet in the grand ballroom of the Elysee presidential palace.

"The course I have set will enable us to achieve results, I hope before 2017," he said. Asked whether he would be in a position to run for re-election, he said only: "What counts in political life is to do your duty, and sometimes you have to serve the future rather than the present."

Hollande said he was willing to go further in European Union integration with Germany, notably in the transition to sustainable energy, and to move towards a "multi-speed" Europe.

Speaking as Scots voted in a landmark referendum on independence from Britain, the French leader voiced concern at the danger of the EU and individual member states unraveling.

"After half a century of building Europe, we risk entering a period of deconstruction," he said, noting that the Scottish vote could set a precedent for the disintegration of other European countries and of the bloc itself.

He rejected alternative policies offered variously by France's employers' organization, dissidents in his Socialist Party and further left, and the far-right National Front.

Tearing up working time, pay and pension rules would merely create greater inequality and increase unemployment, already close to 11 percent, he said. Leaving the euro zone and re-erecting national borders against imports and immigrants would isolate and impoverish France, while letting deficits soar to try to spend the country's way out of economic crisis would destroy market confidence.

Asked about a report that credit ratings agency Moody's had informed the government that it was about to cut France's rating again to Aa2 from Aa1 because of the delay in bringing down the deficit, Hollande said he had no such information.

Rejecting suggestions that slowing down the pace of deficit reduction could destroy market confidence, he said France's borrowing costs were at a historic low, which showed that markets had faith in its ability to repay its debt.

(Reporting by Alexandria Sage, Leigh Thomas, John Irish and Mark John; Writing by Paul Taylor; editing by Mark John)